IFS analysis on the "living wage"

The following note contains a description and explanation of how the IFS has examined the impact on receipts of income tax and national insurance, and on spending on benefits and tax credits, if all private sector employers (and as a variant, all employers) increased wages to a "living wage" of £7.85 in London and £7.60 in the rest of the UK, and if there were no change in employment. Approximately 7.3 million people in the UK are paid less that these living wages, of which about 6 million are in the private sector and 1.3 million in the public sector.